HM Revenue and Customs (HMRC) will be given more substantial access to details of international bank accounts from next year as the tax authority steps up its efforts to crack down on offshore tax evasion.
HMRC will receive information of overseas bank accounts held by UK taxpayers as part of the “common reporting standard” now implemented by the Organisation for Economic Co-operation and Development (OECD).
Over 50 tax jurisdictions have already agreed to the OECD’s regulations to automatically share data on financial accounts held by UK taxpayers with undeclared overseas assets.
The tax authority hopes to get to a stage where no jurisdictions exist to allow UK taxpayers to hide their income and assets, bring it home to roost for offshore evaders that the balance of risk is against them.
What does HMRC consider to be offshore tax evasion?
HMRC says UK tax evasion in its simplest form is the use of another jurisdiction’s systems to avoid paying tax.
This includes moving UK gains, income or assets offshore to conceal them, not declaring taxable income or gains that arise overseas or taxable assets kept overseas, or using complex offshore structures to hide the beneficial ownership of assets, income or gains.
This increased emphasis on offshore accounts comes off the back of recent evidence suggesting that HSBC’s Swiss private bank aided clients in evading tax through provision of large amounts of cash in foreign currency and the concealment of certain accounts from tax authorities.
Justin King, chartered financial planner, Mfp Wealth Management, is sceptical that HMRC’s crackdown will affect those who can afford to ‘find another way’.
“If you have a good adviser they are going to move you to a jurisdiction that won’t play ball with HMRC,” said King.
“Anyone who can afford this kind of advice will find another way.
“This effort by HMRC isn’t a waste of time and they need to do something about it.
“But the world is a big place and if you are very affluent then you can afford the advice that will help you find another way.”